ERP vs CRM: Differences Explained

CRMs and ERPs serve distinct yet complementary roles within a business, each offering unique benefits. Understanding the differences between these software systems is crucial for making informed decision-making about which tool best suits your business needs.

Simply put, a CRM manages the lifecycle of customer interactions, enhancing sales, marketing, and customer support to improve customer satisfaction.

In contrast, an ERP oversees the entire business process, streamlining operations from supply chain management to financial data and human resources.

In this article, we delve deeper into the nuances of ERP and CRM systems, comparing their features, benefits, and ideal use cases. By the end, you'll have a clearer understanding of which system—or combination of systems—will drive the most value for your business.

What is ERP and CRM as far as the acronym meaning goes?

Let's clear up the meanings of ERP and CRM acronyms. ERP stands for enterprise resource planning, which manages the back-end operations of a business to enhance efficiency. CRM stands for customer relationship management, which focuses on managing customer interactions, marketing, sales, and customer support to boost customer acquisition and increase sales.

What is the difference between CRM and ERP software?

The main difference between ERP and CRM software lies in their focus areas. CRM software handles customer-facing activities, such as managing customer relationships, sales pipelines, and marketing campaigns, aiming to increase revenues.

What is ERP and what does it do? ERP software manages the internal processes of a business, including supply chains, production, personnel, and financial management, aiming to streamline productivity and operational efficiency.

While there is some overlap in functionality, CRMs are typically used to enhance front-office operations and improve customer interactions, whereas ERPs are designed to manage comprehensive back-office processes and optimize overall business operations.

For startups and small businesses, CRMs are usually the better starting point, helping to grow the customer base and build brand awareness. They are often more affordable and easier to implement. Larger, more established companies with complex supply chains and extensive operational needs benefit more from ERP systems, which provide the necessary tools to manage and streamline their broader business processes.

By understanding these distinctions, you can make a more informed decision about which system—or combination of systems—best suits your business needs.

ERP vs CRM system comparison chart

Let us have a quick gander at this ERP and CRM systems comparison table. 

CRM vs ERP Key Differences: Comparing Features & Functionality

In this part, we’ll really explore the ERP and CRM features side by side. It will soon be obvious what business needs CRM focuses on and which business solutions ERP specializes in. Below are the key features of each respective SaaS, and where both overlap, we name a winner.

ERP or CRM for contact management

CRMs give you a 360-degree view of all your contacts. This is important for maintaining great customer relations. You get way more details and organization than a mere spreadsheet of names. It shows you the full history of all customer interactions and purchases. It also saves any issues or complaints.

CRMs make it easy for sales or support reps to share contact information. It also does real-time updates on customer profiles. For example, when they change their social media information. You can also get notifications based on user activity.

Winner: CRM

The customer experience is where it all begins and CRMs are more on the frontline here than ERPs.

ERP or CRM for marketing campaigns

CRM software is important for streamlining marketing strategies. It can help plan and optimize ads and posts, and show you the best times to publish. It can manage marketing campaigns across several platforms like social media. Many CRMs do email marketing campaigns too. These campaigns segment target audiences based on customer data. It finds potential customers by creating leads from users who engage with content. 

Winner: CRM

As a marketing SaaS, ERPs rarely have a few features to help, but really CRM dominates in marketing, especially email marketing to your contact database.

ERP or CRM for sales pipeline

CRMs are good for managing the sales process. As part of sales force automation, leads from marketing get automatically put into the sales funnel. The pipeline helps the sales team stay on top of leads as they move to conversion.

Sales reps get tips on when and how to keep engaging. It shows reps where people drop out or experience pain points. This helps plan better for future campaigns and pricings. It’s key for boosting profitability and revenue forecasting.

Winner: CRM 

Once more, CRM focuses on sales and marketing way more than ERP does, however, it should be noted that when marketing and sales are part of a larger project management system, ERP can handle some of these tasks. 

ERP or CRM for supply chain management

Lots of companies can benefit from an ERP system that does SCM, or supply chain management. It covers a wider range of total business needs across an entire organization. Manufacturing is one industry that can’t be without SCM.

ERPs can help with material procurement. It does inventory management and helps organize warehouses. ERPs can show you when space is running out or when certain items are in need of restocking. There are also database tools to keep track of suppliers and other third-party partners.

Winner: ERP

SCM, inventory and WMS are all squarely in the court of an ERP solution. CRM systems do not really include any of these features.

ERP or CRM for order tracking

ERPs maintain visibility over a lot of moving parts. For example, when CRMs help get sales, ERPs come into play to make sure the sale order goes through. It can ensure items are available. It will track the fulfillment of an order from the warehouse to shipping. ERPs can help both companies and customers track delivery schedules. 

Winner: ERP

As you can see, both CRM and ERP have some tools in the order processing management toolkit, however, ERP is just a bit more streamlined to handle the entire order from sale to invoicing to payment to fulfillment. 

ERP or CRM for helpdesk support

CRMs have many tools for customer service and support. It is a multichannel communication dashboard for customers to reach out. It unifies a call center, emails, messages, and live chats. Support CRMs create tickets and let you track them. It helps reps by giving them customer data. CRMs for support have tools to set up self-service helpdesks, like knowledge bases and FAQs.

Winner: CRM

If an ERP system has some customer service tools like helpdesk support, then it is likely because it is part of a CRM module inside ERP.

ERP or CRM for bookkeeping

ERPs are useful for managing the financial aspects of a business. Most importantly are employee payrolls. Other important ERP tools for accounting keep track of payables and receivables. ERP accounting software can also help to stay on top of purchase orders, expense tracking, budgets, and other cash flow analysis. This can be useful for companies looking to invest in R&D or other forms of expansion.

Winner: ERP

When it comes to accounting, bookkeeping and financial planning, a CRM won’t be of much help. This is totally ERP territory. 

ERP or CRM for human resources

While CRMs are good for managing external contact details, ERPs go further for internal purposes. ERP software is a key tool for human resource departments. It can keep you organized for things like hiring and onboarding new staff. It has tools for insurance and liabilities. This is especially good for large companies with many employees spread out over various locations.

Winner: ERP

Human resources, or HR, along with HCM, or human capital management, are more areas of ERP focus and not really for CRM.

ERP or CRM for workflows and automation

The best CRM and ERP systems use machine learning. This means you can teach the platform to automate simple and repetitive tasks. It includes data entry and data cleaning. It can send out automated replies, follow-ups and reminders via text or email. Workflows can be set up for ecommerce to do quotes and invoicing tasks too, as well as order fulfillment. For support, it can help with simple complaint triage and route customers to the best agent.

Winner: Tie

From simple automated reminders to complex algorithmic workflows, automation, machine learning and AI are more and more the lifeblood of all business SaS, that goes equally for ERP and CRM.

ERP or CRM for analytics and reporting

CRMs for marketing, sales, and support gather a lot of useful data. For marketing, it shows which ads get the most attention. Or, it shows data on times, locations, or devices. There is data on the sales pipeline. You also get data on customer service ticketing. Analytics show the performance of individual reps or teams. Reports can be created and updated in real-time.

Winner: CRM

Of course both CRM and ERP generate data, analyze and create reports, but basic analytics and reporting go to CRM as the winner, because as we’ll see, ERP goes beyond the basics.

ERP or CRM for business intelligence

Both CRMs and ERPs are data-making machines. Data in ERP data can cover whole inventory and supply chain management. ERP dashboards using real-time data can alert teams to problems like bottlenecks as they happen. More importantly, ERP data analysis can help diverse departments be aware of what each other are doing. This means if a problem occurs in one department, another department can be prepared. 

Winner: ERP

The level of BI, or business intelligence, is much higher with ERP than CRM, as it can analyze past behaviors, predict future outcomes of present activities, and even do intelligent forecasting.

ERP and CRM integration: can CRM be integrated with ERP?

Yes, CRM and ERP can be integrated together, in fact, it is a very good idea to do so. A CRM and ERP integration allows a company to connect and leverage more data and insights. Sales volumes reported in CRMs can help with production planning in ERP. Customer support issues with products can help improve future iterations. ERPs can alert CRMs about shortages or shipping problems, which can be used to notify customers.

The truth is, much of the time CRM functionality is included in ERP solutions, and it is not uncommon to find a whole CRM module in ERP. This is most common with some big ERP brand names like Oracle, SAP and Microsoft Dynamics 365. Meanwhile, big name sales and CRM apps like SalesForce are slowly getting into the ERP scene with the release of FinancialForce.

To sum this part up, customer relationship management in ERP is not only possible, it is advisable.

Is CRM or ERP best for your business? Our final takeaways

CRMs and ERPs offer different approaches to business management. 

CRM is the main tool for sales reps. CRMs are there to get more leads, boost sales, and develop better customer relationships. CRM is a good standalone tool for startups and small businesses. These days CRMs are used equally by marketing agents and customer support reps too.

ERPs take care of everything going on behind the scenes: stuff the customer does not see. It manages the supply chain and inventories. It helps plan production or R&D for new products. ERPs oversee fulfillment, shipping, and deliveries. It keeps up with maintenance and other overhead. It is also a main tool used by HR and accounting departments. 

So the big question is, do you need a CRM vs. ERP? Well, if you’re a large business with many employees in several locations, you might need an ERP. The same thing goes if you are in manufacturing or have a lot of fixed capital. ERP is the way to go.

Small companies, independent startups, and solo entrepreneurs should probably start with a CRM. Also, if you are an operation that deals with personalized services, like private instructors, consultants or boutique agencies, CRMs are more useful off the bat.

Of course, it is true that many ERPs contain basic customer management tools, and you’ll even find some CRMs now include some light features to help with accounting or inventories. In conclusion, if boosting sales is your current aim, get a CRM. If cutting costs and streamlining operations is your main goal, ERP is the way to go. 

In the end, as your business grows, you’ll likely want both, or maybe you’ll find the perfect unified ERP and CRM solution.